Managerial Accounting: Making Decisions and Motivating Performance ...

Managerial Accounting Decision Making and Motivating Performance 1st Edition Datar Test Bank Full Download:

Managerial Accounting: Making Decisions and Motivating Performance (Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes

Learning Objective 2-1

1) The cost incurred is: A) actual costs. B) budgeted costs. C) cost object. D) cost accumulation. E) cost allocation. Answer: A Diff: 1 Page Ref: 31 LO: 2-1 EOC: E2-1; E2-6 AACSB: Reflective Thinking Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

2) A ________ is usually measured as the amount of money that must be paid to acquire goods and services. A) time B) cost C) goal D) product E) prediction Answer: B Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-10; E2-11 AACSB: Reflective Thinking Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

3) Which of the following explains why managers compare the budgeted costs to actual costs? A) Managers only focus on the budgeted costs. B) Managers only learn how to make better decisions in the future. C) Managers know how well they did to control costs only. D) Managers evaluate how well they did to control costs and learn how to do better in the future. E) Managers never compare these costs. Answer: D Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-10; E2-11 AACSB: Reflective Thinking Skills Learning Outcome: MA-2: Discuss the legal, ethical, and business concepts that affect managerial accounting.

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4) The cost object is: A) the cost incurred. B) a collection of cost data in some organized way by means of a cost object. C) a predicted, or forecasted, cost. D) anything for which a measurement of costs is desired. E) used to describe the assignment of indirect costs to a particular cost object. Answer: C Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-1 AACSB: Reflective Thinking Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

5) Budgeted costs include: A) the costs incurred this year. B) the costs incurred last year. C) the planned or forecasted costs. D) the cost of a competitor. E) the costs incurred two years ago. Answer: C Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-6 AACSB: Reflective Thinking Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

6) Cost accumulation: A) is the cost incurred. B) is a collection of cost data in an organized way by means of a cost object. C) predicts, or forecasts, costs. D) measures the desired costs. E) describes the assignment of indirect costs to a particular cost object. Answer: B Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-1 AACSB: Reflective Thinking Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

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7) The two main ways managers use cost information are when they ________ decisions; and, ________ decisions. A) make; implement B) create; brainstorm C) control; create D) brainstorm; control E) control; accumulate Answer: A Diff: 2 Page Ref: 30 LO: 2-1 EOC: E2-11 AACSB: Reflective Thinking Skills Learning Outcome: MA-2: Discuss the legal, ethical, and business concepts that affect managerial accounting.

8) A/an ________ cost is the cost incurred; and they are distinguished from a ________ cost; which is a predicted, forecasted, or future cost. A) budget; object B) actual; budgeted C) accumulated; actual D) budgeted; actual E) cost object; actual Answer: B Diff: 3 Page Ref: 30 LO: 2-1 EOC: E2-10 AACSB: Analytic Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

9) The predicted, or forecasted costs, are: A) actual costs. B) budgeted costs. C) cost object. D) cost accumulation. E) cost allocation. Answer: B Diff: 1 Page Ref: 31 LO: 2-1 EOC: E2-1 AACSB: Reflective Thinking Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

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10) Evans Manufacturing has three cost objects that it uses to accumulate costs for its manufacturing plant in Virginia. They include:

Cost Object #1: The real estate dwelling(s) (physical buildings and equipment) Cost Object #2: The use of buildings and equipment Cost Object #3: The use and availability of manufacturing labor

The following manufacturing overhead cost categories are found in the accounting records: a. Depreciation on buildings and equipment b. Machine lubricants c. Insurance for property d. Supervisors salaries e. Fringe benefits f. Property taxes g. Utilities

Required: Assign each of the above costs to the most appropriate cost object. Answer: Cost Object #1 includes categories a, c and f Cost Object #2 includes categories b and g Cost Object #3 includes categories d and e Diff: 2 Page Ref: 30 LO: 2-1 EOC: E2-14 AACSB: Analytic Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

11) A BMW X6 sports activity coupe is an example of the ________ cost object at BMW. A) product B) service C) project D) customer E) activity Answer: A Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-1 AACSB: Reflective Thinking Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

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12) Accountants measure the cost of direct materials or advertising at manufacturing plants by using the monetary amount paid to acquire them. Answer: TRUE Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-10 AACSB: Analytic Skills Learning Outcome: MA-2: Discuss the legal, ethical, and business concepts that affect managerial accounting.

13) Budgeted costs are also known as predicted or forecasted costs (future costs). Answer: TRUE Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-11; E2-12; E2-13 AACSB: Reflective Thinking Skills Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

14) Managers use their knowledge about costs to help guide their decisions about product innovation, quality, and customer service. Answer: TRUE Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-18 AACSB: Reflective Thinking Skills Learning Outcome: MA-2: Discuss the legal, ethical, and business concepts that affect managerial accounting.

15) The managers at BMW utilize their knowledge about costs to make decisions about product innovation, quality, and customer service. Answer: TRUE Diff: 1 Page Ref: 30 LO: 2-1 EOC: E2-1 AACSB: Analytic Skills Learning Outcome: MA-2: Discuss the legal, ethical, and business concepts that affect managerial accounting.

16) Recall that managers use a cost system to determine the costs of various cost objects. List and discuss how managers use the two basic stages in this process to determine the cost. Answer: The two stages that managers use are accumulation and assignment. In the first stage, managers accumulate costs. For example, they collect, or accumulate, the cost data that they use in an accounting system. In the second stage, assignment, managers assign the accumulated costs in various categories. Diff: 2 Page Ref: 30 LO: 2-1 EOC: E2-1 AACSB: Reflective Thinking Skills Learning Outcome: MA-2: Discuss the legal, ethical, and business concepts that affect managerial accounting.

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